A building is a business. I repeat, a building is a business. If you manage your own life, you can understand this principle. You have to spend less than you bring in. If you are the one responsible for your home, you have to pay attention to income and expenses if you have any designs on staying in said home. While a business has more moving parts than a building, at the end of the day, cashflow counts.
I bring this up because the community/economic development industries give an outsized amount of attention to business owners, but leave building owners jilted, pining in the shadows, just waiting for a little love.
Entrepreneurship makes Main Street go round, but those working in the field have to remember that building owners are entrepreneurs too. They should be getting a lot more attention. Because if you don’t have any good building owners, you aren’t going to have any good business owners.
Business owners matter, but they get all the attention and this puts the cart way out in front of the horse. No matter how good your organization might be at developing entrepreneurs, if they don’t have a place to locate their business, you’ve got a problem.
Here is a very common situation I have found myself in. Getting the downtown tour from the Main Street director and they tell me about the businesses they are working to grow or attract. It’s all very exciting stuff, of course. So they tell me about the new brewery or olive oil shop and I nod my head enthusiastically and agree fervently that this is indeed great news. Then I ask the real estate question. So where will this business go? Wait, what? Yeah, sadly this business is going to need to find some sort of address to have their packages delivered to. They’ll need four walls, and a ceiling- what’ve you got? Blank stares. How is this part so often overlooked?
A good business is going to need good space. There are few exceptions to this rule. If you have no available space, don’t expect any businesses. If all you have is bad space, understand that you will be attracting bad businesses. You know who wants a run down $200 a month space? The startup church, the Beanie Baby lady, the DVD store and the karate shop.
Good business owners want good spaces. Bad business owners know they need to keep expenses down. Good ones know that their product needs to be housed in the type of place that reflects positively. They know that quality matters at every level. They understand that location matters and marketing matters and they can make more if they spend more. If your downtown is full of rundown real estate, you will attract a bunch of rundown tenants.
Just because your downtown has a bunch of empty buildings, doesn’t mean you are in any position to launch your entrepreneur development programs. You are, in fact, not in such a position you may just end up finding a bunch of renters for the mall or the next town over. You have to get your real estate house in order before you work on business development.
It’s great that there are so many resources for small business owners, but it’s preposterous and counterproductive that there are so few for small building owners. Because without the small building owner, the small business owner doesn’t exist for you or your downtown.
And just because you have empty buildings littering your downtown, doesn’t mean you are ready for new business. This is a huge, big, large, sizable, substantial and girthy misconception. Just because a building is empty, doesn’t mean it’s ready for lease. It usually means just the opposite. This is one the biggest misconceptions and roadblocks on Main Street. It makes sense to assume that an empty building belongs to a rational human, and that particular human that would like to see it occupied with a paying tenant- but that is rarely the case. Crazy, right?
The circumstances are varied and generally convoluted, but the point is this, if a building is sitting empty on Main Street and no one is actively trying to sell or lease it, consider it unavailable. Whether it’s part of a trust, owned by some family in Florida or part of a portfolio that is being used as a tax write-off, it doesn’t matter. That building is not a candidate for any of the businesses you are developing. You aren’t going to fill that space, you aren’t going to convince the owner of anything. Your only hope is replacing them.
This is why small building owner development is so much more important than small business owner development. There are plenty of business entrepreneurs, but nearly no building entrepreneurs, because they aren’t provided the same resources, yet they are substantially more important for the health of your downtown.
A downtown full of empty and rundown buildings will never attract good tenants. No one wants to put their kickass company in your dumpy district. So no matter how many business plan classes you offer or SBA loans you can secure, you aren’t going to convince a savvy business owner to chance their baby on your downtown if it isn’t ready.
Bad business owners seek bad space. They want low overhead, they don’t plan to make much money, they aren’t serious about a business plan, they don’t care about cash flow. These are not the tenants you want. Good space attracts quality tenants- every damn time. I have yet to see someone fix up quality commercial or residential space downtown and have any problem filling it. That’s because current demand far outstrips current supply. There just isn’t enough quality space in your downtown to meet the current demand, but sadly there is a surplus of crappy space.
This is why small building owner development is more important to your success and the health of your district. When you help foster small local developers, you are addressing the real problem plaguing your district. You just won’t have good tenants until then. Plus, quality local developers will help ensure the success of their tenants. Hell, often times the owners of the downtown building are much better at recruiting their own tenants than your Main Street office is. They are highly vested in their own success and will work their asses off to ensure their space gets filled. Quality local developers will recruit their own successful tenants because it is in their best interest.
In addition, they will write good leases, because they understand their tenant’s success will dictate their own success. They will work with the local Main Street office as well, because they understand the district’s success will, again, dictate their success.
So the hard truth is, your downtown will never thrive as long as the real estate is not in local hands. All your great entrepreneurship development programs won’t matter if the fruits of your labor have to locate in the strip mall.
The key to the revitalization of your downtown starts and ends with fostering local developers. Put aside the small business programs and identify small developer programs. Adopt legislation to kick the deadbeat owners to the curb. Talk with local banks about financing small projects. Move economic development money over to training and gap financing. Find investors. Bring in The Incremental Development Alliance. There are plenty of options to boost your efforts.
Your town was built by the hands of hundreds of small developers and it will only get rebuilt with those same hands today. Small business owners matter to your downtown of course, but they depend on small building owners.